PeopleSoft’s UK users may face antitrust questions

 
 
 

5 September 2003 Hundreds of PeopleSoft’s UK customers are likely to face questions from European Commission (EC) antitrust officials if Brussels launches an in-depth probe of Oracle’s hostile bid for the enterprise software giant, Infoconomy has learnt.

Sources close to PeopleSoft say that the questioning will likely cover issues ranging from why an organization chose a particular software product to whether it would feel compelled to migrate to another supplier if the Oracle-PeopleSoft deal goes through.

Before its acquisition with rival JD Edwards closed last week, PeopleSoft had about 350 customers in the UK, including BT, Safeway and Dixons. It inherited some 500 new UK-based clients from JD Edwards. It is unclear whether former JD Edwards customers would be questioned as part of an EC antitrust review.

The EC is likely to follow the example set by antitrust investigators in the US, say PeopleSoft sources. Some of PeopleSoft’s US-based customers with more than 1,000 employees and at least $250 million in revenue are already participating in the ongoing US Department of Justice (DoJ) review, the software company has confirmed.

So far, the EC has been working closely with DoJ officials to prepare the ground for a potential future probe. That investigation cannot begin until Oracle officially informs Brussels of its intention to acquire PeopleSoft – a notification that it has yet to deliver.

But once Oracle files its merger with Brussels, the EC will begin a 30-day review of the deal. Given its significance to the enterprise software market, the EC would almost certainly extend its initial probe, say antitrust experts. In the US, the DoJ has already extended its inquiry and has begun questioning PeopleSoft customers.

At a gathering of analysts and media in New York yesterday, PeopleSoft executives sought to dampen down speculation surrounding the Oracle bid. “This is a movie that has been played out. People have lost interest in it,” said PeopleSoft’s president and CEO, Craig Conway.

But behind the scenes, PeopleSoft’s lawyers continue to lobby hard in the US and Europe for the Oracle bid to be rejected on anti-competitive grounds.

PeopleSoft customers would suffer greatly from an Oracle acquisition, according to the company’s CTO and senior vice president, Richard Bergquist.

“The enterprise applications market would be reduced from three to two [main vendors – Oracle and SAP],” he said. “That would have a major anti-competitive impact. It could allow for price rises and we believe that it would stifle innovation. That would be bad for customers.”

For example, he said, some 40% of PeopleSoft’s customers have databases supplied by Oracle’s rivals, including IBM, Microsoft and Sybase. “Oracle only supports the Oracle database. That would be anti-competitive,” he added. “This all comes down to choice. With PeopleSoft, customers can choose the database and the infrastructure that is best for them. Oracle would be taking that choice away.”

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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